ABSTRACT
Habitat loss and fragmentation caused by economic development are major threats to the conservation of biodiversity (Millennium Ecosystem Assessment 2005). Policy responses aimed at addressing this threat have so far been inadequate. The main policy response – the designation of areas as reserves where economic development is not allowed – has generated some protection. However, the selection of reserves may not have led to a cost-effective allocation of land between areas for conservation and areas for economic development (see Ando et al. 1998 for the general idea of cost-effective land allocation, and Polasky et al. 2008 for an empirical analysis where land allocation is not cost-effective).
